it is friday, july 24th 2015. and "squawk box" is beginning right now. live from new york where business never sleeps, this is "squawk box." >> good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. breaking overnight a tragic story in louisiana. three people including the gunman were killed. nine others were injured in a shooting at a movie theater. witnesses described hearing about six shots in the screening of the movie "trainwreck." police say the 58-year-old man used a handgun and took his own life. investigators know the identity of the gunman, but they have not released it. governor bobby jindal calling it an awful night for louisiana. >> you heard me say this earlier tonight. they ran towards danger not away from it.

the first officers heard the gunshots and they still ran through that theater. they do an amazing job protecting us every single day. i'm grateful for their heroism and i think we'll hear other stories from folks inside the theaters as details come out. >> we're switching gears this morning. we have breaking news right now. it is now official anthem is buying cigna for $188 in cash and stocks. the transaction valued at $54.2 billion on an enterprise basis. this of course, a transaction that's been long in the making. we've talked about it over and over as other deals have come and gone. we've seen etna now merge with humana. there will be issues and questions in washington about regulatory questions, about consolidation. just to give you a couple quick breakdowns, it's $143 per share in cash 0.5152 shares in anthem stock. you might remember this deal was held up for at least a bit because of questions about the

roles of the different ceos in this. questions about what was going to happen to david cordani who had been holding up for perhaps a different job, in this case joseph swedish is going the be serving as the chairman and ceo of the combined company. david cordani will be the president and ceo of the chief operating officer. they say they will be expanding to 14 members and mr. cordani will be joining them along with more independent members. when you really look at this deal from a premium perspective, you remember this did leak early, but if you really go on an unaffected basis, we're talking about 38.4% premium to cigna's closing price back on may 28th 2015. that was the day before news of this transaction first leaked. under terms of the transaction, the consideration is going to be about 55%/45% anthem shares. when you think about the split,

however, between control if you will anthem shareholders will control about 67% of the company, 33% of that held by cigna shareholders. one other piece i was just looking, it's a really -- i mean it's huge when you think about how many millions of people this company is going to be connected to. 50 million people. so it has a huge huge impact in terms of the country and what it does. of course, that's one of the reasons that regulators -- >> well and what do you think actually happened in washington? that's the big question on this. to this point, people assumed these deals would go through. but taking five major health insurers and swishing that down to three has to result in all kinds of questions about competition. >> i'm not worried about this level of competition at all. these krps being forced to get together because the amount of care that they're expected to provide right now is absolutely impossible given the amount of

subsidies and -- you're seeing 30% and 40% requests for increases based on obamacare. if they can't cut $2 billion -- >> 6 million people are coming in and -- >> for whatever reason what they're taking is not covering the cost of care that they're providing. we knew this was going to be an issue. it's being forced by obamacare. if they can save $2 billion, they're in a better position to provide the care without raising the ire of government officials that say you're trying to get a 30% and 40% rate increase. >> completely and completely changes the balance, though when it comes to the hospitals and the doctors who are working with these insurers and hoping for equal care on the same side. there's been massive hospital consolidation, but you would think that wouldn't even keep up. >> i don't look at it as oh my god. there's no way the single insurance companies are going to be able to control the market to raise prices in a noncompetitive fashion to pad their profits

because the problem on the expense side of things is so big that it's forcing them to do this in the first place. >> but you eventually get to a single provider health care system i guess is the question. >> i don't know. i mean i heard -- i don't know. but i don't see this as an offensive move. i see this as a defensive move. being thrust upon these -- >> the question is going to be -- >> regulators can't all of a sudden come and say you can't do this after the action is what forced them to do this in the first place. you wrote one of your columns about that. >> the question is going to be whether the savings, if you will, get passed on to the customer or not. that is the question. you should know, by the way, combined -- >> that's not what it is, either. with the savings, you mean they're going the try and keep premiums as low as they possibly can to provide the care that they're trying to do. >> i'm not telling you the transaction is a problem yet. i'm just telling you that there's a question.

>> what do you mean savings passed -- it's barely -- >> here is what i'm trying to tell you. they're saying they're going to drive adjusted earnings per share increased and up 10% in one year with that more than doubling in two years. >> it's to try and hold premium increases down. they're not going to pass on savings to customers. these are the companies expected on the exchanges to provide the insurance coverage. and you've heard all week long that the pocket expense, deductibles are higher. we'll see what finally happens. there's an election coming up. i don't know if you -- some laugh about obamacare because of the number of people being insured is going down but the final verdict knot in on what this is going to do to our system. >> some of the folks that own the debt they are going to be a cash component, they are going to be getting some money. they received financing

commitment from bank of america, credit suisse and ubs. they say they're hoping to retain their confidence over investment grade debt rating. they say the close of the transaction should happen in the second half of 2016 after, of course, all these regulatory hurdles and questions are ironed out and that they would bring -- that after that it would bring the ratio in terms of the debt to capital ratio down to a low 40% range. >> at the same time, cigna put out a press release talking about what it sees for its second quarter results plus raising the outlook for 2015. and i guess that's a question, too. >> it's weird. >> they're coming in with higher numbers, they're now looking at second quarter 2015 expected to be at least 6350 million or 250 a share. that's compared to -- >> you know it's going to be a political football. >> this is the point -- >> it's going to be a political football.

>> you can't say your business is getting better. you either have to say your business is going to hell in a hand basket and that's why we have to merge because you've completely screwed us up or life is great. obamacare -- >> handed these insurance companies a plum opportunity to make a lot of money. so now that they're in a position where they are this plum opportunity to make a lot of opportunity -- >> i don't understand. it's either a plum opportunity or a -- >> it's a plum opportunity because they're the ones that are going to to have to -- they're in a position where they're going to have to provide the insurance. they weren't government entities which they wanted to set up. there wasn't a government entity to do it. they're going to do it but if they don't merge, you know you're going to see premiums go up 30% and 40%. >> they're going to -- >> but bird res going to fly and fish are going to swim. there's always this tension between -- we talk about it all

the time. these are not not for profit -- >> that is going to be the difficulty in washington. saying i need a -- >> it's going to be a political football. exactly. >> i like this story with amazon is one that we can talk about. just because of the numbers that we're dealing with here check it out. amazon shares surging after the company posted earnings of 19 cents a share. the street had been looking for a loss of 14 cents. revenue also topped consensus in the current quarter forecast is bullish. the big driver amazon's cloud computing services is all good news for shareholders. a big win for the e-commerce giant ceo. in less than an hour of trading, jeff bezos became $7 billion richer. the difference between makinged 92 million and losing 92 million on -- what was the revenue number? 23 billion. >> 23 billion. look at the profit margins.

>> when you look at it if you do a decimal point difference in what they were able to bring to the bottom line it's so minute it reminded me of when they do the jobs numbers where there's millions of jobs and, you know tens of millions of jobs involved and you finally look down and it looks like a net gain of 200,000. it's a rounding almost. >> right. >> but then -- so i multi flied -- >> that's the opportunity. >> is it? i multiplied 92 billion times four. >> 92 million? >> 92 million. >> times four. that is like 270 and then the market cap is almost 300 billion. just to see if i could get a price earnings. i think they would prefer not to make a profit because then you say it's infinite pe. so this was a big surprise. everybody loves it. because it defines the company that's trading at a thousand times earnings. >> price certainings, 994 times. >> so it's -- you know so now you can define what the pe.

>> because there's a profit. >> i'd rather say, they don't make a profit. trust us trust us it's going the pay off big. >> they turn the screws there and they can change wall street's perception drastically. that's what's amazing. you look at the masses, the billions. 224 billion dollar market cap. >> god bless him. you know, i would certainly -- >> that probably doesn't include yesterday's gain. jon if that 224 includes yesterday's gain. >> i don't know if they -- what do they have? there it is, 262. >> 42. >> pretty amazing. >> yeah. >> not sure we would have jeff bezos laughing today. do we have that queued up? >> all the way to the bank? >> well i mean -- >> there we go. how much did his net worth go up to yesterday? >> $7 billion. >> 7 billion? >> yeah. >> you know you can tell that's old because he still had -- he

was still doing it with the hair back then. now he accepted reality. >> here -- or cojack. >> inside the numbers, gene munster. senior research an list at piper. gene, more and more people use it. revenue, maybe the revenue number being up 20% was the real catalyst, not necessarily the $92 billion -- 92 million in profit. that was more -- that's responsible for the pricing move probably. >> i think you're absolutely right. the margin expansion story has been going on for a couple of quarters now. that continued and that was kind of double what analysts were expecting. but that's part of the narrative that's happened. aus mentioned the big kicker here that has just put some real oxygen behind there stock is their unit growth has accelerated from 20 to 22%, which doesn't sound like much.

but when you put in the context the last time the unit growth grew was 2012. that changes the dynamic because you get the force of upward margin plus accelerating unit growth and that's a rail combination and that's why the stock is doing what it's doing this morning. >> four times -- jack welch. four times 92 is 36. yeah 36. >> thanks jack. still sharp. he's got his clakter there. >> i think he can do that in his head. >> i'm not so sure any more. anyway that's pretty good. you've been positive on this, gene? >> well yeah. we've had a lot that we've gotten wrong, but we've been working in the right direction on this one. so the profitability played out. we're hoping for the acceleration in units. and i think the important part of the stone story is that this can continue.

and the reason they've added we estimate about 20 million prime users over the last year. they've basically gone from around 30 million to 50 million. each prime user spends about three times as much as a prime user. you start to get the compounding factor of that over years, that's the reason to stay positive on this. >> like a tale of two cities. but what happened with apple the other day and what happened with amazon both on nuanced. nothing that -- i mean if either one reacted the other way, no one would be surprised. you never know what is actually going to happen with these things, do you? it depends on how far the stock has come and sentiment and everything else. apple -- everything was great and it lost how much in margin cap? 60. and then you know and how profitable apple is. and then you look at this. they barely got a profit and it's the same story, only trading higher. >> i think one of the factors that -- the slight differences

is that in apple's case, people look forward fort next 12 months they're not too excited about the next big cycle. but amazon's case when you look forward to the next decade it's easier to get comfortable. and i think that's why you have these big moves. >> i really like what we did there. we had this ready to go and google was the other one. >> wait a second, i thought apple was a 60 billion loss. not 31. >> yeah apple -- yeah lost -- i don't know. i think maybe it opened there and -- because it did in the jobs. >> it opened at 122 and was up to 125 or -- all right. so, you know watching amazon over the years, a lot of people just have put their faith in bezos that he knows what he's doing in terms of getting more and more people just collecting users before profitability. do you think this is an outlooker or is it now a company that operates in the black? >> well i think you never can rest easy with amazon because

they're such big picture, make such big betts. but one of the things that the cfo said in the conference call is the steam will continue to focus on productivity which basically means hope for greater margins in the future continues to be a focus. i would put it this way. it feels like the margins over the next few quarters will continue to move higher. but to say we can rest easy for the next few years on that i think is a fool's bet. >> to take over the world for amazon what do they still need to do? they still need -- where do they need warehouses around? are they eventually going to have you know one hour drone delivery in every -- on every continent from the warehouse? >> probably. i think maybe before that it's going to be the same day push. and that's been the one weapon that traditional retailers have had against amazon is the ability for you to walk in the store and get it right away. so what they've done is ramped up in the last year and a half the number of cities. it's gone from 6 to 13 that

offers same day. you think that's probably going to be around 50 cities in the of course few years. so this concept of two day, everybody thinks of amazon as two day is going to morph to one day. prime day, they're going to launch in london soon and that's going to allow an hourly delivery. so the answer to your question is that the insatiable appetite of having every right now, they're going to satisfy that and that's one of the reasons they're going to gain market share in retail. >> we had a guy earlier this week who sold his business to amazon. he now thinks he will compete with amazon by offering lower prices and slower shipping does that make any sense to you? >> there's a segment that makes

some sense. i think it's more of a competitor against costco. i think they're going after a much more price conscious shopper. and so i would say that there is a segment for that that is price conscious and it does make sense. ultimately, one of two things is going to happen with jet. they're going to be successful and amazon is going to buy them. my bet knowing the guy who founded it he's a winner and they're going to be successful. so i wouldn't be surprised if amazon folds this in just like they did with diapers and zappos this is in the next few years. >> stay close. >> thank you. >> we have caterpillar and then you see google and amazon. that's what the world is like, right there. we better move into the digital age. >> i think andrew is already there. >> you're there. i've got apple music.

>> how is your apple music streaming going? >> i have like 12 -- i'm so confused. i don't know which reo album i'm listening to any more. but it's starting to sound the same. >> time to switch it up a little? >> time to switch it up a little. can you send me some good lady gaga albums? >> i don't have any lady gaga albums, but i could possibly. are you on spotify? >> you guys figure this out and i'll tell everybody else up next sir martin sorrell will be stopping by the squawk set to talk about advertising changes, what's happening with digital, what's happening with television advertising. and later this morning, the check out this lineup. among our newsmakers, front tier communications executive maggie wilderotter, lynn doughtee. hans bishop, as well. stay tuned.

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welcome back everyone. digital ad spending jumped 21% from a year ago. joining out right now, sir martin sorrell. he is the ceo of advertising giant wpp. >> there ways to celebrate and there are -- >> we're celebrating your

success. >> and becky is talking about the growth of digital whereas linear remains under pressure. >> for an old guy, you understand it, right? >> very old guy, an aging guy. >> but we discussed that at some rally at one point. >> we did. >> i believe that off the record the -- >> no, themeatic is what's the future of tv? that was the biggest issue, which wasn't resolved what the was it? >> no. and we are watching massive amounts of money that are coming out of traditional forms of media spending and going into digital. are you expecting that to continue? >> it's going to continue. it's 40% of our business now. if i went back to the year 2000 it was zero or close to zero. i would anticipate it would be well over 50% and the ability to differentiate between what is analog and what is digital is going to disappear. >> what does this mean for the old players? are they losing out?

>> what it means for us becky, is that 75% of the businesses don draper would never reckon. so our revenue is 20 billion. media is 5. data is 5. and digital is 6. so 16 out of 20 is nonmadmen stuff. it's just going to continue. and you see that -- i mean you see the amazon results last night. you see what's happening in -- generally in the online space. and the interesting thing about amazon's results last night is the market cap has surpassed walmart. so is amazon alibaba flip cards or are they going to become the new walmart, tescos over the next 20 years? we're in the hunt for a data piece of tesco, which ironically was the data retailer. there's just another sort of

emblem attic change that's taking place in the data industry that we see. >> i guess my question is, i understand how it changes and how the ad agency has to keep up with that. what does it mean for traditional media players who are used to getting a massive amount of that? >> as we were discussing in sun valley, it's the biggest challenge. how does a traditional -- you started to see some literature by brokers and analysts about, you know is the challenge facing linear tv going to be the same as facing newspapers with google? i don't think it is as earth shattering and i don't think it will be as fast but it's dangerous to say that because everything happens much faster than we anticipated. but i do think there's something in it. if you look at time spent versus industry investment for tv in 2014 in the u.s. 37% of consumers time spent on linear tv 41% of the investment. it's the first time we've seen a significant difference between time spent and industry

investment. it's usually tracked together. the online space, including internet and mobile usage, which is about 48% of time and currently only 31% of industry investment. so those two things have to shift. >> can you weigh in? this is not digital where they're trying to become digital on the transaction and what it means. >> it's puzzling punish you and joe would say paying 30 sometimes times operating earnings for even a brand as powerful as the ftm -- we celebrated the 10th anniversary of our brand valuation last night and it was a top -- we did the top 100 brands by valuation for the last ten years. those brands have outperformed the msci. if we do the 2 and 20 fund and invested, we would outperform the msci by 20 times. so companies that invest in brands grow their revenues faster and that's the biggest shareholder return and the share

price appreciation. now, what you saw yesterday with nikkei and the ft sur peace that. the real issue is if you're a japanese company and you're in a japanese economy which is the third largest in the world which is contracting, family size are declining, population is aging, what the hell do you do? so you go and a lot of people -- >> do you go and buy the ft at a -- >> there's no percentage. it's -- >> but i would have understood that if it was a billionaire doing it as a vanity project at a accuracy prize. but nikkei is not a vanity company. >> but it's even worse -- >> would you say 30? >> i just looked amazon made $92 million and they got like 1800 billion in market cap gains. 30 sounds reasonable to me. >> press assets joe. going back to becky's original comment saying about the growth of digital, the ft has -- barber has done a fantastic job of moving the ft on to digital. >> we decided with content, it doesn't matter how it's delivered.

>> it's brand. >> even the "new york times" are still worth something. >> will a private company -- >> 2 plus billion dollars. >> hold on a second. will a private company in japan, totally male dominated, private board of -- it's just about this particularly at the age of 70 but of older men running a company, will they make the investment necessary to change the ft even further? fascinating subject. >> you're 70? >> yes. >> that's news to me. >> thank you. >> it's a new -- >> i am on there, too, so nobody can deny. but i think it's a fascinating thing that happened yesterday. when the announcement came out, i think cnbc ran something saying it was goe going to be announced. the last company i thought it would be would be nikkei. i obviously thought bloomberg when you saw that. >> springer was the cover bid. >> axle spring is looking and i

think that's a better deal for axle springer to unite a newspaper group which has gone strongly digital because -- >> with tv. >> yeah exactly. and we'll all be at google camp next week and we can discuss the implications of that in italy about the implications of a spring. but i think that's a better deal from axle springer from our perspective. when look at our penetration of axle springer in terms of advertising, there's an opportunity there. on the ft what's even more interesting, it's not going to stop at 844 million pounds in terms of spending. you have to invest in digital. remember, the ft keeps the economists 50% and interesting, they keep the building. so pearson keeps it. so theme kept the 50%, the company was speculating this

morning that maybe might beal bloomberg will pick that up. >> why did you buy the daily news? it only costs a dollar. >> the inherent value of the jumble puzzle that we played today is -- >> i have enough trouble, gentlemen, trying to run -- i don't believe in vanity. >> you could be the next max well or murdoch or something. >> max well? >> i don't think murdoch is very flattering to you. >> well i beg to disagree. the companies that we work with that do better is where you have the unification of owner shi and control. so companies which are controlled by -- and you see that in the tech space. those are the companies that do

much better. >> check it out. >> the new study -- >> i will give it to our m&a team. >> the actual product ised 1.25. the entire company is $1. >> and just everything -- >> maybe we should send this to japan. >> sir martin, thank you. >> as always it was fun to see you this morning. >> you know shatner is 84. >> it's a state of mind. >> rub either murdoch, all -- reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

breaking news this morning, ajt em finally buying cigna. this has been in the making for quite some time. your quick views, just sort of headlines right now on the deal and the way it's structured? >> extra teenl lick istrategically, it makes a lot of sense for both companies to combine. whether, i believe anthem is overpaying somewhat for cigna and i believe cigna's hand was forced a little bit here with humana off the table going to etna. >> and when you think about the issue, i don't know if you heard us talking at the beginning of the show cigna come out with some expectations and better earnings. when you think of what's going to happen in washington over this deal and the other deal that's on the table with etna and humana what does it mean and will both of these deals get through at the same time? >> yeah.

with the market pricing, a lot of the stocks aren't going to be done. but i believe ultimately the government will officially sign up on all these materials because the bigger these mcos, the better off. and the theory goes eventually they'll be able to pass down the savings. >> will they be able to minimize the politically unpopular increases that we hear all the states talking about or will -- in andrew's view, the stocks are at all-time highs. it doesn't look like they're dealing with the negative ss financial implications of beak. >> contrary to a lot of popular

belief obamacare provides a lot of good volume at the end of the day for them. and if they can gain that volume at good price and profitability, it's a good deal all around. so a lot of these companies had to increased premiums over the last year because they were pricing so aggressively he in 2014 to gain transaction in the market. what you've seen here is the reason why these companies are gaining is because they have to offset a lot of the profit pressure. >> that is the who thing we're talking about right there, offsetting the loss of profitability as the stocks continue to surge to new highs. that's what we don't -- you know that's why both sides have ammunition to argue from. >> yeah. you're right.

it's a double edged sword. there's a lot of moving parts. ultimately and what you need to think about as an investor is these companies need to become bigger more efficient and these deals make total sense from a strategic standpoint. however, again, i think a lot of these deals are overpriced to begin with. >> we're going to leave it there. we will be talking about the transactions throughout the show. that you can very much thank you very much for joining us. >> it depends on what happens. are they able to get the pricing or not? you can have masses of people and still not make a profit. or if you're able to get the pricing power and you have masses of people -- >> you look at how much money they're making you can't say it looks like it's a defensive move. >> particularly when they are raising their profit. >> that's what i mean. i can't -- >> you can't fight with me. >> although you can't fight with me either because premiums are going to go up. >> and that's -- >> it's a half empty, half full. it's a push-pull.

>> when we come back this morning, we'll hear guests talk about 3d printing. it happens all the time. but if you are like most of us it may sound confusing. we're bringing two printers to the studio. check this out. we have some video from just 30 minutes before the show today. we watched a prosthetic finger being printed right here on set. it's a faster cheaper process than traditional manufacturing and it is changing people's lives. we're going to tell you all about this today. >> who gave us that finger? >> they gave you the finger. you deserve it. >> which finger? was it an index? >> i think it's a pointer fij, but we'll find out. >> for you, it's not the pointer finger. >> after the break, the creator behind a 3d printing car. that car, it was printed, too. stay tuned.

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welcome back. this morning on "squawk box," we have two special segments looking at the disruptive potential of 3d printing. this cobra right here check it out, was -- this sa replica that was produced by a 3d printer, if you can believe it. it's made of cash job fiber, reinforced plastic and designed and printed in just six weeks. it weighs just 1900 pounds. that's 600 pounds less than the factory version. joining us right now to talk about it is jordan brand. also lonnie love is the corporate fellow and group leader of oak ridge national labs and creator of this cobra. so when people say this is 3d printed, the whole thing didn't just come out of a printer. >> a lot of it did, yeah. >> it's the pieces that came out of the printer. just so i understand, the tires --

>> nope. >> the seats back here? >> that's right. >> but tell me what came out of a printer here. >> the frame. the structural elements the body and the whole thing. >> this came out of a printer? >> that came out of a printer, correct. >> and what about the engine inside? >> the engine is actually not there, it's in the back. it hats an electric motor, a battery up front. and the thing that's really impressive about it is the -- most 3d printers make small things slow and it's relatively inexpensive. the whole thing took about 24 hours to print. >> the whole car in 24 hours? >> all the major components in 24 hours. >> how long would this traditionally take? >> traditional manufacturing, you would have molds and forms and you could stamp it quicker, but the molds and forms would cost you hundreds of thousands of dollars if not millions. with this you just directly print it.

>> how far are we? how many years away are we for cars and other products like this to be printed regularly as opposed to coming off of a traditional sort of manufacturing -- >> there's applications today. it's a lot closer than people realize. when you look at the biomedical industry, after the cups are 3d printed in europe aerospace is moving very aggressively. one of the biggest stories right now is ge is manufacturing fuel injectors that go into their next generation engine. in two years, they'll be producing about 28,000 of them. >> and they'll be flying actually in the plane. >> and the push is money. >> check out this for a second. >> this is manufacturing. >> that additional manufacturing. >> tell us what this is. >> this sa structural bracket that would be bolted on to an aircraft and it would with stand

a few hundred keel lows of pressure. >> this is very heavy. >> a human would design it and traditionally manufacture it. this was 3d printed and designed by artificial intelligent. this is much lighter. you can tell the weight. and when you're in an aircraft every pound that you save you maul multiply that over the number of times a plane flies in its lifetime you're saving millions and millions of dollars. >> what about the strength of this one? >> equal to this one. basically, this was designed in the computer. we told the computer what loads it needs to carry and what shapes the connections need to be and it designed itself. >> how big are the printers? just give us a -- >> the one that did these is about the size of a big refrigerator. the one that did this one, much bigger. >> probably around -- the one that did this one made by a company cincinnati incorporated, it's probably around 15 feet wide, 30 feet long about seven, eight feet tall. >> the cost of something like this compared to the regular

process. >> so the materials, we have about 500 pounds in printing material at 4 bucks a pound. so there's two grand there. take -- the 3d printing part takes abouted 300. you're talking under five grand. >> thank you for bringing these. is this a present for us that we can -- >> have fun. it's all yours. >> traditionally when you manufacture it it takes a long time to start because of the tooling to get the thing produced. here, you can start right away manufacturing the final product. customization it's a lot easitory produce one off small volume production. >> real quick before we go the headlights? >> yeah. you like that? >> no. but is that out of a printer, too? >> no. that's coming next. we're getting there. >> gentlemen, thank you. we should thank lonnie jordan. >> becky, in the meantime i'm going to send it back to you. >> i like the new squawk sports car. we're going to talk a lot about 3d printing.

when we come back striker ceo kevin lobo. "squawk box" will be right back. of like shopping hungry equals overshopping.

at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason.

it could've been brenda. beating analyst expectations on the top and bottom line boosting year guidance. kevin lobo is the chairman and ceo of striker. and you are actually affected by the dollar too. but you're 68% in this country,

right? >> sure. >> and 32% elsewhere. so organic sales are up and let us know if they affect the sales. >> organic sales up 7%. very strong. >> and with currency they were? >> if you include currency 8%. we're still over positive growth. many companies that are reporting have negative total growth. so our u.s. business grew over 9% which was tremendous growth. >> what are the products you're selling internationally? same product mix here. >> we have a lower set of products for trauma and spine that are not yet sold. >> and who competes with you? usual suspects? >> j & j. they're over there too. >> you made an acquisition for something in turkey right? >> correct. they have a state of the art facility and provide products lower prices than our main line

stryker products. >> so it's a manufacturing firm but only better. are you going to use it to branch out into other things? >> for now it's our medical division which is growing close to 20% the last order. strong performing business for us that we sell globally. obviously transporting from the united states costs a lot. having local manufacturing does help us. >> in the past economic slowdowns have cost people to put off getting a new hip or getting a new knee. it's hard to believe that those are elastic things the demand. but they are. who pays for it now? >> so there's a combination. commercial payers and medicare that is a big payer right now because most people are older. and so they get their payment through medicare. if you have a hip procedure or hip pain you really can't defer it. >> i know i'm asking the questions, but i feel like you're singling me out.

>> my hips are good. how's your hips feeling? >> i'm defensive. they're fine. but golf over the years -- >> yeah. a lot of younger people are going to stay active. >> would it help you do more push-ups? >> all range of mobility. >> we were talking about 3d printing today. i know everybody's got a different hip socket a different size. does that eventually work its way into what you do? >> yeah. we have launched some 3d printed products. part of our knee system the tibial base plate is 3d printed. that enables you to not use cement. you can get structures of the metal you can't get otherwise. we just launched about a month ago some cones that are used -- if you have to get a new replacement, you have to get a revision, you have to fill the bone. so we launched those as well. >> so what's your most in terms of material what metal do you use the most? >> titanium. is 3d printing cheaper?

>> no the titanium. are these commodities cheaper? >> there's not a lot of variation. it's what you want from a performance characteristic versus care savings. >> will you say we're not going to pay for certain things? cms they make decisions based on what they'll cover. >> joint replacement is a phenomenal treatment. everybody knows somebody that's had a hip or knee. it saves health care long-term. if you get people active and moving, they lose weight they tend to be much more healthy. these are great procedures and they've been transformed over the last 30 years. the outcomes are terrific. >> private insurers chafing at all? >> not really. what we've seen in the past on knee replacement, you can defer that. in the past we've seen a pace of replacements. but those are terrific procedures. they're well reimbursed at the moment. there are movements towards moving towards bundle payments. >> how much revenues are medicare? >> what percent?

it varies by division. but if you look at knee and hip business a preponderance are. >> would you be a proponent of all the insurance deals or no? >> they don't really change the game for us. >> nothing. >> doesn't affect us. it's neutral. we sell our products all over the world and the payment mechanism doesn't really matter. >> i wonder if medicare pressure will eventually be something you worry about. >> no it's not something we worry about. we have single payer health care systems and two tier systems. as long as we provide value with our products and the products return patients to active life we'll do well. >> i think stryker was in there too. it's a cool name. >> well it's the founder. he was an orthopedic surgeon. >> we've got ten seconds. thank you. when we return, a huge payday for jeff bezos. and we'll welcome today's guest

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xçó0 amazon sharply beating expectations in its latest quarter. the after-hours move pushing the retailer market cap above walmart. and adding $7 billion to ceo jeff bezos' net worth. maggie wilderotter is executive chairman of frontier communications. plus new data on what's keeping american ceos up at night. and 3d printing disrupting the health care industry. we'll introduce you to the young man whose life has been changed by a 3d printed prosthetic.

the second hour of "squawk box" begins right now. live from the beating heart of business new york city, this is "squawk box." >> welcome back to "squawk box" right here on cnbc first in business worldwide. i'm andrew ross sorkin along with joe kernen and becky quick. we have breaking news this morning. it is now official after some time of rumors and speculation. anthem officially buying cigna. that transaction valid at a total of $54.2 billion on an enterprise basis. the company will serve 53 million customers. this comes a few weeks after etna announced they were buying humana. the premium on this unaffected stock price before all those rumors first emerged, close to 40%. about 38.4%. so big deal this morning. breaking overnight -- i'm just looking at the -- looks

like -- it's like a $48 stock being up $9. it's a huge move. switching gears to the tragic shooting yesterday at a movie theater. it's not -- i think it's almost to the day, what three years after the -- >> colorado. >> -- person in colorado who we've been watching sentencing and the verdict come down there. and then this. three people were killed. and we're saying were killed. one of them was the shooter. two people were killed and then the other took his own life. nine others were injured. here's nbc's john yang in lafayette with details. >> last night about a hundred people in this theater watching a screening of "trainwreck" about 20 minutes in heard what they said sounded like a fire cracker. it was the gunman firing at two people in front of him.

investigators now try to figure out the motive. seeing if there's any connection between him and the victims. but right now this is all a big mystery. back to you. >> okay. john yang thank you. we'll keep you updated on any new developments if there are any this morning. turning back to business. among our other top stories, we've got some earnings coming out. check out amazon. that's the company joe was mentioning. shares surging in a big way after posting earnings of 19 cents a share. the street had been looking for a loss of 14 cents a share. now quite bullish. the big driver and this may be a bit of a surprise. amazon's cloud competing service. we always talk about prime and the retail business. but the real growth is coming from a different place. it was a big win for the ceo. in less than an hour of trading yesterday, jeff bezos became $7 billion richer. we'll talk more about it this morning. in addition, starbucks shares

perking up a little bit this morning. went for the cheap shot. the chain's earnings beating the street by a penny. sales also topping consensus. starbucks says new food, drinks and technology help it attract more customers. and revenues there a bit slight forecast at at&t. the company saying wireless net additions for the quarter totaled more than 2 million beating estimates. also at&t's $48 billion acquisition of directv has reportedly cleared its final regulatory hurdle. the ftc expected to okay the deal officially today. joining to weigh in on this is our guest host maggie wilderotter. she is part of frontier communications. she just stepped down in april. maggie, you've been with us many times on set but this is the first time as a guest host so welcome. >> it's great to be here. no doubt about it. and an exciting day. there is a lot of news. >> when you look at the at&t deal, are you surprised that it

cleared after the comcast deal with time warner got shot down? >> well i don't think that you can ever predict what the government is going to do. and there's always people that will protest every deal that comes up in front of the fcc. but i think the fcc made a good decision. >> what does this mean for at&t at this point? >> well i think it gives them a huge foothold in the video business in a very different way. it transforms them to be the leader in video. with the directv subs along with the u-verse subs at&t already has. it does give them more clout from a content perspective. and it gives them a lot more reach from a customer perspective. >> it's amazing to watch the changes happening. just a changing landscape. how do you kind of keep your head up around everything that's happened? >> well it's not easy because it does change every day. but it's an exciting time in the industry too.

i think whenever you have disruption and changes in consumer behavior it does give companies the opportunity to respond in different ways than they were before. i've been running a company that's 86 years old and we've had to transform numerous times in the tenure i was ceo for ten and a half years. but what we did is we stuck with the customer. small and medium sized businesses as well as consumers as well as how do they want to do things different than they were doing before. we launched over the top video programming several years ago. we knew there was going to be a change. customers don't want to buy 500 channels anymore. and only watch 12. so those catalysts drive huge innovation. >> although you hear how verizon is kind of breaking out and now offering these tiers to its customers. you see the pushback from the channels who say we don't want

this. a lot saying no you can't buy us. that's the friction you'll see along the way. >> and i do think you're starting to see some of those channels relinquish and start to put smaller bundles together. i think you'll see new ways of content being developed on the internet that will create the new channels of tomorrow. that'll be really geared around ip and not necessarily about a traditional linear video play. >> what does that mean for the traditional players? that's what has everyone worried. if this is your business and it's shifting away from you, can you still capture it? >> well i think they have to decide that you can't stay just in one camp. that you have to do more than just your traditional business or somebody else is going to take it away. >> i'll bet you it's not a zero sum game. it'll be market growth. >> yeah. look. i remember in 2004 when i came to frontier everybody said you know basic telephone service is

dead. right? more than 50% of our customers still have landline service today. so there is a segment that will always have the bundles and want that type of a television experience. but if you want to grow and change and gather a new audience, sometimes you have to do things differently. which is what we did when we introduced broadband back in 2004. we said you know you can't just have telephone service. you have to have more than that. and where are things headed. >> that wasn't going to cannibalize your business by making that movement. >> yeah it does. >> the other piece has a larger challenge, no? >> well we have ip telephone. right? so what happened is when we first got into broadband, the cable guys got into broadband not just with you know traditional broadband as we know it today but also for telephone. so we had to compete with that. it wasn't just people were disconnecting and not using telephone service anymore. they could get it from other

playser. >> you've been watching these changes come along. who do you think is at the forefront of understanding these changes and then moving to strategically get in front of it? >> well in the telecom space, definitely lowell mcadam from verizon and at&t. they get it. they've been very good to move their businesses over the years and they've been formidable. you look at verizon introducing fios. that's the best network in the country. i'm proud to say i bought a lot of fios from verizon. you look at the last ten years and randall stevenson has been there 30 years so he's seen tremendous change. on the cable side you're going to start to see changes too. brian roberts is very smart. he's been around a long time. he'll morph and change as he's done in the past. they've gotten very formidable on content where ten years ago they weren't in content. so yul see these players continue to -- >> talk about "squawk box," i

guess. formidable content. we get your drift. did you pick up on that? >> connect the dots right back. >> yeah. right back. >> i heard it. you could have said "squawk box," but you didn't have to. >> i didn't have to because i'm talking to all of you. >> in terms of content, what do you think about amazon getting into this world? >> netflix? >> i think you will see players that are nontraditional. >> so who loses in this? if you pick them. if you had to say five years from now companies we won't be talking about? >> if i could predict that i probably wouldn't be co-hosting with you on "squawk box" this morning. >> what does that mean? >> she'd be retired on her own private island. >> that's right. >> maggie you point to lowell being very smart from verizon. but you've also done big deals where you've been buying the stuff they're getting rid of. how does it make sense to take his assets and what are you doing with them at frontier?

>> we are very good at running wire line businesses in our company. the way we look at it even the explosion of mobile and wireless, the only thing that's wireless is from your smart device or cellular phone to the nearest tour. everything else is wire lined. everything else is carried on networks like frontier has. we also know with the networks we have we are getting more capacity on these networks with improvements in technology. i mean i can deliver 100 meg on dsl today. and we are doing in the lab 300 meg and gig service on dsl. so i do think most people say the technology is passe, but -- >> the deal you have is you're taking their landlines in 14 states for -- >> i'm buying three states for $10.6 billion. i did buy 14 states for $8.6 billion about five years ago. so i have a second deal pending

with verizon right now. and those states are california florida, and texas. and it's fios. so i'm getting fiber to the home fiber to the business. these are great markets. >> why are they selling that? >> will net neutrality be the same way it is now in five years? >> i hope not. it's got to change. >> will you see less capital investment if it stays like it is? >> i think we will. i think we have to return investment to shareholders. >> all 30 self-centered greedy capitalistic comments you just made. are you aware of that? >> oh yes. very much so. >> okay. >> and it's okay. i do run a business on behalf of shareholders. >> we get along so well. and you know all this stuff and also know about shampoo from my hometown. >> yes. from good old cincinnati. pantene, great stuff. >> i use pantene. but there's so many kinds. i don't know. should i repair my hair? should i make it fuller or silkier? >> i think it's going to be

repair. >> good answer it's a great company. >> jinx. >> that's a jinx you owe me a coke. >> another great company. >> another plug. >> maggie is with us for the next couple of hours. we have a lot to talk about. maggie wilderotter. coming up when we return a wealth management firm placing on research. american century investments has paed paid more than a billion dollars since 2000. the ceo will join us next. and we've got the new ceo of kpmg joining us in her first interview since taking that job. and our discussion on 3d printing continues with a young man whose life has been changed by this technology. stick around for that when "squawk box" returns.

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welcome back to "squawk box." the futures right now hasn't been a great week. makes you wonder where to be. we were below down for the year. janet yellen is going to do something some day. you mention it's a bad day to quit the -- that was an airplane quote. >> that was you that mentioned that. >> bad year to raise interest rates. >> it's a bad year to raise interest rates. it's the same thing.

there's always a reason not to. we may be waiting to go forever. there's your buddy with the hair again. >> oh, good morning. >> that guy is so crazy. he's a fabio wannabe. revenues in line. he never waves to me. >> can you blame him? >> yeah. stock is trading higher. xerox, you heard of that company? >> yes. >> matching revenues. fell a big short. there it is. i knew this. maggie sits on the board of xerox. wall street getting back to basics. the big bank's under stifling pressure shifting their focus back to the business of managing money. wealth management division is now the crown jewel of morgan stanley as well as other firms. what does that mean for the shops on wall street. $150 billion. and donates 40% of the profits

for cancer research. good morning. >> good morning. >> i should add to that list by the way, not only are wall street looking this way but all you guys in silicon valley trying to get into the money management business as well. >> absolutely. >> you put both of those together and then you think of yourself as a stand alone and you say what's going on here? >> yeah well you look at why are people looking at wealth management. is that what you're asking? >> why and then what do you more importantly as a stand alone actually do about it? >> absolutely. so the banks are just in wealth management bauds it really is low capital requirement business. it's steady earnings. it's recurring fee revenue. it drives higher multiples of the stock price. you mentioned morgan stanley and james gorman. they're probably the first big banks to move into their 2016 or so to join the company. started the merger with citi

bank and has grown that business tremendously. i think between recurring fee revenues, drawing higher multiplings, all of these are attractive. and the regulators aren't that focused on it. it doesn't use a lot of balance sheet. so dodd-frank and voeckler aren't all focused on pipt. >> i feel like that would be the red flag for being focused on pipt it. >> my apologies. >> it feels like everybody is racing to be part of the wealth management business. >> there's actually been if you go back to the financial crisis there are probably seven big firms. there are probably four right now. so there's been a tremendous amount of consolidation. and what they do is provide advice to clients to help them prepare for retirement, achieve their goals. and i would say that this country's in need of that. so from a wealth management perspective, it's good. i think as a country we're probably still underserved in that space. a lot of people could --

>> you thinkthink if we don't have the individual start taking personal responsibility when we've got the birthrates down baby boomers. there's not enough people to pay the retirement. i'm living to 160. when they cure cancer because of these things i'm going to live to 160. who's going to pay for that? >> where i was going to go with this is we talk oftentimes about millennials who are not saving the way they are supposed to. to the extent they are, some are moving on to new digital platforms. is that something you think actually works long-term? >> so the roboadviser i think is what you're talking about there. it's probably a supplemental to human advice. but i don't really think it's going to completely supplant it. if you think about it we're at the end of a six and a half year bull market. >> we're at the end, did you say? >> perhaps. >> is that a call? >> not a call. >> careful. people are listening. >> today's the last day.

we've had a six i can't have year bull market. and so getting advice from a roboadviser probably helps. but i think when -- investors have to protect themselves from themselves. and in a market correction i think human advice and consultation is going to be good. >> hey, jonathan one of the things you mentioned andrew is the millennials. you have a great business. you do a lot of philanthropy. you donate a lot of money to cancer research. millennials are very oriented on who they do business with. one thing i always thought about your company is the relationship side. you know you talk about the investment side. but talk a little bit about how you build those relationships to make them lasting. >> sure. one of the things that absolutely differentiates us from all of our competitors was mentioned at the beginning. we direct over 40% out of our profits each year to find a cure for cancer and other gene-based

diseases. since the year 2000 it's been over $1.1 billion we've directed in that fashion. people do business with us first and foremost because of the investment performance that we generate. on the other hand people believe in our mission. and you talk about millennials. millennials choose where they're going to work and where they're going to invest and who they're going to engage with in large part driven by social impact. >> so tell me this. what are you most worried about for your business? >> you know, the markets like i mentioned earlier, we had a six and a half year market so far -- bull market so far. >> right. >> there's always risk of some correction there. you look at china. that's clearly generating concerns globally. but i think, you know for us the issue is our clients just sticking with the program. if you look at returns and almost any metric rarely are

those actually realized by investors because of their own behaviors. pulling out, abandoning the investment at the bottom and not taking the ride back up. we think if we can convince our clients to stick with us through full market cycles it will be in their best interest. >> and keep buying in cycles. they're 25 years old. there's nothing -- if they do it just over time there's nothing basically that can go wrong unless it's the end of the world which only happens once hopefully. >> that's correct. >> and it's about channels though, too. probably morphing into different channels for you to tap into a different market. >> you should make people think about it themselves. our fundamentals we're never going to cover up if we don't take personal responsibility. never going to cover them and we'll end up like greece. so you can actually -- the cancer donations are nice but you should feel good about what you're doing in your day job. >> great return. absolutely. >> jonathan thank you for coming in this morning. >> thank you. >> thank you. when we come back this morning, an exclusive with the

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facebook taking on youtube with a push in video content. our own julia boorstin spoke to youtube ceo about new competition in online video in a cnbc exclusive interview. >> how concerned are you about facebook? >> well facebook is always -- i mean facebook does -- they're a large player. so i think it's always important to look at the competition and to take it really seriously. that said like this is a really big space. and so pretty much any way you look at it. time of users, advertising dollars, subscription dollars.

it's very large. the tv market. and it's moving to online. we think there's going to be a lot of opportunity for different players to come into this space. >> youtube just launched a mobile app that has editing tools. we've got more of that interview at 11:00 a.m. eastern time. also coming up the new u.s. ceo of tax services firm kpmg. u.s. ceo kpmg. i hope you're not rotflmao. i know. wtf. they have new data on what keeps american ceos awake at night. but first as we head to break, take a look at u.s. equity futures. a new season brings a new look. a chance to try something different. this summer, challenge your preconceptions and experience a cadillac for yourself.

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♪ welcome back to "squawk

box." among the stories that are front and center this morning, here's what's going on. vf corp. posting better than expected earnings this morning. also raising its forecast. then we've got biogen shares. they're under a bit of pressure this morning. earnings and revenue missing the mark. and spirit airlines earnings topping estimates. low cost carrier getting a boost from more flights and new routes. are you guys spirit guys? my wife was asking last night if i wanted to go on a spirit plane in and out of denver. we're going to visit my sister. i've never been on spirit. >> i haven't either. >> take that ride and let us know how it goes. check this out. we find bugs that are pesky and unpleasant summer companions but for the airlines it's a much bigger deal. turns out they are a fuel

wasting money eating drag. every time they've got a clean wing. if it goes if you run into bucks, that slows things down. believe it or not it adds up to a lot of money. nasa scientists are teaming up to tackle the dilemma of keeping bug guts from sticking to wings. they are testing out wing extensions and non-stick coatings. it could save the company $240 million a year just on the bugs. even more if it keeps off other stuff as well. >> ick. we're all familiar with that. >> bug guts? >> there's a -- you don't come from where i come from on the turnpike, but there's a couple places going through the marshes -- >> i bet. >> you know that part of the turnpike in jersey where the bugs are thick. and there's certain times especially at like 4:00 in the morning and you go through -- oh, yeah. >> i dare you to ride with an open window and stick our head out. >> it's like that country western song.

sometimes you're the windshield sometimes you're the bug. >> the last thing that goes through a bug mind when it hits your windshield? >> what is it? >> its rear. >> for a look at ceo confidence and whether corporate leaders feel prepared we're joined by lynne doughtie. chairman and ceo of kpmg. less than a month? >> 24 days. >> 24 days? >> yes. >> awesome. he looked nervous the other day because you're doing a good job. did you pick up on it like that? >> i don't know about that. he's doing a fantastic job. he's got a big job globally. >> so let's talk. in this country domestically

what does kpmg do differently today than with the old accounting firms years ago? >> oh gosh. >> it's like apples and oranges at this point. >> it is. it's driven by our clients and how they're changing so rapidly. as you look at the impact of new technologies, you've got the 3d printing on today and how that impacts us as how we're serving our client. not only as auditors but also as advisers advisers. >> was it ever offensive kpmg? you have to -- you know when you're doing someone's books you got to make sure you don't do something wrong and everything passes regulatory. are there offensive things you can suggest for clients now? >> well i think when you look at some of the top risks that clients are dealing with today, you mentioned regulation. i mean that's top of the list. >> it's more than cyber? >> i think cyber is right up there with regulation but -- >> good that our government is

just a little bit more difficult to deal with than the cyber hackers. probably not an exaggeration. >> but also in the ceo survey we just did, it was over 70% of the ceos were also worried about how are their services, how are their products going to be relevant over the next several years. so so much emphasis on innovation today as well as they think about how do you transform and get that growth that you need going forward. >> you have been with kpmg since 19 1985. >> you're dating me. >> in the way of change but you've also run the business to the auditing side where there is opportunity for your company. and now in the 24 days that you have been the fearless leader of your company, tell us a little bit about surprises, things that are a-has. >> well i think one of the

great opportunities you have when you bogo into a new role is the doors are open for you. you can get a meeting with anybody you want. >> you get to come on "squawk box." >> i get to come on "squawk box" which is amazing. and so i think that was, you know, the announcement comes out and the whole world opens up to you which has been phenomenal. and also you know just how much you're embraced on how can we help you? other ceos and leaders who are -- we're kind of all in this together. how are we all tackling the challenges that are in front of us? and i think that's been a really welcomed surprise. i think, you know on the other hand too, your calendar takes a life of its own. and so i could probably use advice from you on how you manage that going forward. >> i hate to tell you, you never get to manage it. sorry. but also tell me a little bit about -- you're a high profile woman running a big company in the united states. and you have a great reputation in your company of really

supporting women in that pipeline. talk a little bit about how you can help make a difference to accelerate that more. >> well i think just the nature of my appointment and my role sends an important message to women in our profession, in our company and business that you can do it. you can be married. you can have family. you can have kids. >> and you were elected by the partners too. >> elected by partners. and it's possible to do it. and i think, you know we as part of our women's leadership summit which you attended maggie, one of the findings that i thought was really interesting, over 60% of the women that we surveyed said you know, they aspire to a leadership role. they aspire to be on boards of directors. but less than half actually saw themselves in those roles. and i think it comes down to confidence. i think seeing more women in

leadership roles helps to inspire that confidence and say you can see yourself in those roles. >> kpmg is out in front in a big way. we play golf together. how long is the sponsorship with the pga tournament itself? >> it's one of the majors. yeah. we have an ongoing commitment. next year we're going to be in. >> in westchester. big time course. great place. and we talked about men's golf. i don't know who's up and coming. i don't know whether they're always worried about whether it's increasing or decreasing. there's no doubt that young women are coming out in droves. >> yeah. that was a great opportunity to not only elevate women's golf but also elevate women in business. because, you know we had the kpmg women's leadership summit as part of this major golf tournament where you had women who were just steps away from

the suite together with leaders. and we had phenomenal speakers like condoleezza rice fantastic panels that showed women that they can do anything. and it's a year-long program. but also the golf side of things was we were also trying to get more women involved in playing golf. >> well you're lucky it was me -- someone that doesn't have a big ego. and other male ceos if you see michelle wie. if i hit it as hard as i could and everything went right and then she would hit it it would be 0i9 yards past me. >> i'll tell you, i had the privilege to participate on the advisory council for that tournament and also the leadership conference and just the women, stacy lewis, annika they were all involving the young kids out on the course to watch. because there is this competitive spirit with sports

and with business. it was great to really shine a spotlight on that. >> cnbc and golf go together and i think it's good for leadership too. >> and cnbc was great. the golf channel, they were great. it was really a well done first inauguration for you guys. >> that was a fantastic event. i think it also allowed us to talk about business issues at the same time. and i think the women on the tour appreciated that as well. you know mixing golf with business. and actually that's why we encourage it. you know we're all about the relationship business. and no better place to build relationships than on the golf course. >> she hit it 90 yards past lauer too. it wasn't just me. and i accept that. >> i'm glad you didn't say how much further she hit it than me which was quite a ways. >> i'm really killer. >> you drive for show. >> absolutely.

>> kpmg you're out in front of the whole women issue. i think other companies are going to follow along as an example. >> best of luck too. we're so excited for you. it's great. >> thank you so much. >> come back again soon. >> i will. thank you. 3d printing is disrupting the health care industry. next a young man whose life has been changed by this new technology. no branches equals great rates. it's a fact. kind of like shopping hungry equals overshopping.

at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

welcome back everybody. we are back on the plaza this morning talking about the disruptive potential of 3d printing. specifically how the technology is revolutionizing the health care industry and sports equipment industry. this morning we are lucky enough to have a young man with us here this morning to show us exactly how this technology works. adaptive sport athlete eric merkal. he was born with one hand but he enjoys kayaking and thanks to his 3d printed prosthetic he

has overhauled his stroke. we'll get to that in a moment. creating prosthetics for paralympic organizations. also andres sebastian and jordan brandt. so gentlemen, welcome to all of you. it is great to have you here today. eric, i just want b to say this is pretty amazing. you've been showing a bit about what's going on. why don't you talk about what you can do now because of this prosthetic device that was all done with a 3d printer. >> well, what i can do with this is actually attack to the paddle. so i can pull back much earlier than i would have been able to. i used to wrap my arm around and pull. >> and that's a much tougher sort of motion. show me your motion now.

>> my motion now would be this. >> that's really super fluid. and you can go much faster like that. >> yes. much more power. >> tell me about the prosthetic devices you used over the year. when you first started you would go to shriners? >> yes. in massachusetts. >> what was the process like at that point? >> it was, you had to get a mold casting of my arm. and then we'd have to go back and pick it up like a month later. >> and it takes some time. it takes a lot of medaling around. now it's gotten easier. >> much easier. >> how fast is something like this now? >> well took about two weeks for andres to send us the prosthetics. we just skyped with him and were able to make the adjustments to it ourselves. >> that's amazing, right? >> so there was no like -- for

shriners if there was any adjustments, you had to go back. >> right. so andres why don't we talk about that? what you guys are able to do that now with this 3d technology is really quickly and print out things just like this. >> yes. that's one of the really exciting and interesting things about what we've been able to do. manufacturing technology for prosthetics, it's a slow process and it's been a relatively expensive process. there hasn't been an economical way to make new prosthetics for children as they outgrow them roughly the same as they outgrow shoes. if your shoes are costing thousands of dollars, it doesn't make sense to get those. so jeff here has an example of one of those older versions. >> yeah. this is a traditional made out of carbon fiber, but the fingers are quite expensive. the process to make something like this is quite expensive. and it doesn't come in pediatric sizing. tends to be heavier because we build things robust. we know it's strong enough to go to war, let's say.

but sometimes you don't need that. the lighter weight is more beneficial to the individual user. >> what's the cost of the one you're holding versus the cost of the one you're holding? >> well it comes to the technology -- technical aspects of medical billing. so with time labor, everything included, insurance companies. this is about $8,000. you know a lot of times they just talk about the materials themselves which is only a small portion of this. what would you say the materials are? >> steriles on this-- materials on this, 30 to $50 range. >> so you've been able to give away prosthetics to how many children over the last two years? >> in the two-year history of our organization we've delivered about 1500 hands globally. >> wow. that's incredible. jordan what do you see happening from here? that's an amazing technological advance. what happens in the next five to ten years? >> if you look at 3d printing at large, what you're able to do

now is rapidly customize things. print it cheaply and quickly and potentially even do it in your own home. what we're seeing in the future and this is happening today as well are custom implants that go inside your body. this is a custom hip implant printed out. i don't know if you can see this it's very porous and to promote ossification of the bone. these are things starting to happen today. and traditionally what would happen when you come to the surgical room they'd have a tray of small, medium large. and pick the one closer to your fit. now they can make one specific for you. >> eric i wonder what all this has meant for you to do this? you're an athlete on different levels. what has it meant to get prosthetics faster easier and fit better? >> especially i feel like with

the fit because as you said it's, like they had them in, like spefblgcific sizes. now you can adjust them easily to fit your needs. >> fantastic. thank you for joining us. gentlemen, thank you. love to e see the work and we appreciate the time. guys back to you in the studio. >> thank you. coming up guest host maggie wilderotter. and talking about the fight against cancer immunotherapy and the partnership with celgene.

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welcome back to "squawk box." our guest host this morning is maggie wilderotter. she's the executive chairman of frontier communications and the former ceo of the company. and we're putting up a family photo of maggie with her three sisters. her older sister is the ceo of campbells soup. two female ceos in one family. >> that's me on the left yes. >> so the question, what do you guys talk about? what was going on in your family? to generate two ceos. >> well it's a great question. you know i think because my dad had four girls and didn't have any boys to work with at the time we were it.

he worked for at&t for many years then cincinnati bell. so he was in the telecom space. he commuted into new york by train to new jersey. by the end of the night we would sit at the dinner table with him and he would tell us about his day. >> tell me this. you also must have had chutzpah if you will. from "the wall street journal," this is in ninth grade. you invited the president. this is president nixon. >> yes i did. >> to one of your events. >> that's correct. i was on the city council in ninth grade representing the students in our community. >> right. >> and it was during the vietnam war. we had a couple vietnam vets that had lost one or both legs in the war. we were doing a fund raising event. >> so you invited the president. >> yes. i wrote him with tickets. so i'm sitting in math class about two weeks later and someone comes in and my math teacher says maggie the white house is on the phone for you.

there's the principal, the vice principal. i get on the phone with a staffer from the white house and he informs me that the president was busy and wasn't going to be able to attend. i said well how about the vice president, can he come? >> which one was it? >> it was ford. >> that's better anyway. >> he was busy too. >> so you kept pushing the issue. this is good. >> he said you can't come. i said are you sending a check for the tickets? that's what i cared about. we had to get the money. >> this is chutzpah. >> they did. and my letter and tickets are in the nixon library. >> no way. >> yes, they are. >> it's an awesome story. >> so i was taught to always go for it. >> your sisters have had amazing career. they're all in management. >> exactly. >> denise i'm really proud of her. she and i are very close, my older sister. we're 13 months apart so we're

irish twins. we've helped each other over the years. it's a privilege. >> did your dad move you to cincinnati? >> no because i was already out of the house. >> but he did have to move there. >> he did. he lived there for about 12 years. loved it. really did. it's a great community. it really is. >> cool. >> thank you. we have much more to come this morning. amazon shares spiking on earnings and revenue. analysts will be joining us next to weigh in on the strength in cloud services and the prospects for growth. stick around. "squawk box" will be right back. a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

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breaking just this morning, anthem buying cigna for $188 a share creating the nation's largest health insurer. we'll go inside the numbers and the impact on that sector straight ahead. plus primetime for amazon. the stock surging close to 20% pre-market. we dive into the market and discuss why jeff bezos is laughing all the way to the bank. and the high flying cyber security sector in focus. the ceo of palo alto networks joins us to talk online threats, breep breaches, and securing networks as the final hour of "squawk box" begins right now.

live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box," everybody. this is cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we are less than 90 minutes away from the opening bell on wall street. we've been watching the futures this morning. they've been slightly higher through the morning. dow futures up about 36 points. s&p but 5 and nasdaq by 33. also look at the markets in europe. the cac in france is up by .3% and in italy up .5%. this broke this morning, but kind of knew about it because you can see from the move in the stock. not much left to move on this. but anthem is buying cigna. joining us on the phone, ana

gupte. it's a pretty rich price for cigna, what do you think? >> it's a very attractive multiple. i had not expected that anthem would raise the price much and i think our expectations have been generally in line. so $188 is really attractive. shareholders should be happy. >> the rationalization that the combined companies will be able to achieve is -- how should we look at that? it's -- there are synergies as well because they're not in exactly the same businesses but what will this allow a combined company to do? >> well i think this transaction is attractive both strategically and financially. as you point out, financially they're guiding to almost $2 billion in synergies. huge cost potential to become more efficient. there are also medical cost synergies. but additionally i think it's

pretty strategic. particularly for anthem that has been looking, i believe, to get to a national footprint. this gives them some independence, if you will from the for profit blue cross blue shields in the 36 states that they do not have a blue cross blue shield license. secondly, with cigna they get more complimentary capability ifs for the employee markets. cigna is terrific in the self-insured stop loss market. and anthem is very good in group commercial risk and public exchanges. so together they offer a full suite of services and capabilities for employers. >> as the industry shrinks in terms of the number of players, who is it the fewer players will be able to squeeze? who's going to not benefit? hospitals? how's it going to work? >> it's largely for the hospitals. to some degree the physician groups feel a threat as well. but to a large degree this is

about more contracting and negotiating leverage in the local markets. i would expect that after obamacare with the profitability cap, the medical loss ratio, and the stringent rate reviews, that consumers should benefit from some of these deals because the insurance companies have some caps on their margins really and have to pass on some of the savings to the consumer. >> the stocks aren't acting like there's caps on anything. in terms of pr that's probably not great. because the other side can certainly point to the all-time market cap and levels where the stocks are. that's why that's hard to understand how it works. the insurance companies went from the greediest guys on the block under the president -- under president obama. and then they go into a foustian deal that nobody benefitted more than the big insurers. >> they did get a huge amount of revenue, no doubt, joe. in terms of margins, there's been a lot of pressure. so bigger is clearly better.

and they need to get the scale to meet the margin requirements. but they're barely making single digit margins in some of the most attractive segments. >> so the -- >> how do you account for the stocks? if margins were squeezed with just the sheer volume of new business that the companies got? >> it's the sheer volume. not just from obamacare and expansion but the broader overhaul has offered a lot of growth opportunity in medicare and medicaid through privatizization privatizization. while maintaining some decent margins. >> so if they didn't merge, would all the premium increases we're seeing that a lot of states are asking for, will those be less than they would have been if these guys are able to come together? >> the margins have been

compressing. just from shifting to lower margin, higher loss businesses. and then even within the existing segments in commercial for example, the margins have had some pressure particularly last year in 2014. >> going to help you with your column on tuesday on how you're going to -- i mean -- >> we should make this easier or harder for them? >> whether what is the bottom line in terms of what this does for consumers? look at the greedy profit amongers running the place. she said customers. >> will this actually really get passed onto them or not? >> i would hope the consumers and employers should see something. the regulatory scrutiny is going to be very stringent. that's one of the reasons the stocks are not trading as a big merger out there right now. and i would imagine the regulators would have some pretty strong concessions from the companies to get this bid.

>> thank you. >> thank you. >> why do you wait until the last minute every week? >> this is the column. we now know what to write. >> you remember everything she just said? >> like a lock box up here. >> lock box. that's for social security. >> anthem's a great company too. my dad used to sit on the board of anthem for years. >> what was anthem before it was anthem, do you remember? >> they did change their name. >> was it wellpoint? >> yeah. that's right. >> came up with that before you said it in my ear, god. >> the other thing about these deals is it does give them more flexibility because there's still a lot of uncertainty with the health care laws today, with obamacare. so i do think that shareholders like it when strategics bring other companies together to give them more scale. >> i had spoken with doctors and people at hospitals and they are concerned about what this will mean. if we're dealing with much larger players, we're going to have a harder time -- >> from a negotiation perspective, absolutely.

>> -- getting the rates you deserve. i wonder if it means more consolidation. >> the doctor lobby is always more popular than the insurance lobby. >> and consumers, they go to their doctor. that's how they look at it. >> what inning are we in with the implementation of obamacare? third maybe? you see what people are asking for. but you have to ask and i think they can't necessarily turn it down completely the federal government. but i think it's going to be interesting to watch. give us something to talk about for the next couple years. in the meantime let's talk about amazon this morning. that is the other big story of the day. the company posted an unexpected profit earning 19 cents a share. shares surging on the news. upgrading the stock to overweight. the new price target $700. just how big is the e-commerce giant? the market cap jumping $40 billion overnight making it more valuable than the world's largest retailer walmart. joining us now is victor anthony

and jason del rey. does this make any sense to you? is there any way this explains how amazon could possibly be worth more than walmart? >> well i think you have to look at the fact that there's two distinct businesses for amazon. one is a retail business. the other is the aws. >> the cloud business. >> yeah. it's worth about $120 billion market cap. that comparison is not really fair. >> when you think about the profit and what's going to happen in the future i feel these guys can turn the dial one quarter and decide we can prove to everybody we can be a profitable enterprise. then they turn it back for maybe a couple years. then to surprise everybody, they turn it back on again. >> it's an investment cycle. the latest one started in 2010. so it was a long time coming. and so i think now they're coming off the peak of the investment cycle. >> so you're not going to see

profitable quarters. >> in the future amazon could again embark on another investment cycle. but i think, you know investors have come to realize that. they've been extremely successful. >> $92 million and $40 billion in market cap. $40 billion is $40,000 million isn't it? >> i guess you can look at it that way. >> and this is $92 million and then $40,000 million. it's just -- how does that work? >> you have to look at results coming out last night. one of the best quarters i've seen in amazon in some time. returns on investment capital increased for the third quarter in a row. that's the time you want to buy the stock. >> okay. different question. do you actually need to have the cloud business and the retail business together? because now you're actually creating a cloud business that's so big that competes with ibm and microsoft. and you could make the argument that it has nothing to do with

the retail piece of the business. >> sure. it may not have anything to do with it. but amazon behind the scenes has been moving money around for more profitable businesses into new projects. and so i would -- if you're hinting that could we see a spinoff some day, i highly doubt it personally. but to the point about profits, i'm not sure that they're done with the investment cycle. you see grocery delivers same-day delivery india, video. all huge projects for them. so i would personally not get used to this as an investor. but if i'm a brick and mortar retailer that doesn't have a lot of differenceuation right now and i see these numbers, i'm worried. if i'm a macy's i'm really worried. because you don't have differentuation right now. and same-day delivery hasn't even kicked in. i'm really nervous right there. >> maggie does this make any

sense to you? how do you as somebody who has run a truly profitable business look at this business? >> wow. >> and the way it's valued? >> as i tell my employees, sometimes life's not fair. but i do think, you know what amazon has done on cloud has been pretty incredible. it is a crowded, competitive field. it almost looks like a winner take all here. what do you all think about that and where's the vulnerability on that for them? >> it's 50% ebida business. amazon has roughly 55% market share. that is only going to continue over time. you've seen alibaba coming in google stepping up competition as well. amazon has customers locked in. switching costs are high. i think it's only going to grow from here. >> where's the growth from a market share perspective? i mean are they still able to catch up to that or not? >> well the growth is outside

of the u.s. there's a lot of runway there, i think. from start-ups, small businesses, mature businesses coming on. and i think amazon grows along with the market as well. and i think continues to take shape. >> okay. we've got to leave it there. thank you. by the way, what's your price target on this? >> i bumped it up to $650. >> one stat by the way. walmart 2.2 million employees. amazon like 150,000. >> very different models. >> welcome to the new world. >> yeah. added 18,000 last quarter. coming up when we return we've got more. juno therapeutics signing a deal with celgene recently to fight soft cancer tumors. the stock is on a tear. we're going to speak to the ceo when we come back. meantime, check out shares -- rather, check out the futures to see how the markets are setting themselves up on this friday morning. dow looks 25 points higher. s&p 500 up 4 points.

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welcome back to "squawk box." stocks to watch this morning. starbucks shares rising with earnings beating by a penny.

sales also topping consensus. biogen shares also under pressure this morning. earnings and revenue missed the mark. lowering guidance based on slower growth for its new multiple sclerosis pill. and we are calling this game-changing science. that's what's driving juno therapeutics trying to trigger the body's own immune system to attack cancer cells. fresh off a $1 billion partnership with celgene, promising results on soft tumors and what we can expect for juno's treatment of hard tumors like breast and lung cancer. that's what we're going to be talking about. you got to live with it. hans bishop ceo and cofounder and president of juno therapeutics is here. our guest host is on juno's board. we're talking about a component of the immune system. take the t-cells out of a patient, his own t-cells.

which for some reason in sernl cancers don't recognize as cancer. and it's partly understood why that happens. >> we're understanding a lot more about what's happening. the reason cancer tricks your immune system into thinking it's healthy tissue is in part by cells talk to each other by flashing little proteins on their surface. and cancer tricks the immune system into think it's healthy tissue. the second trick it plays is it just down regulates the immune system. it switches it off. >> for anything. that's why you're susceptible to other -- >> exactly right. >> okay. so there are certain proteins on the surface of cancer cells that might be recognized by or you can actually take the t-cells out and put a rescepter on those

which they'll be able to see on the cancer cells. and then it also overcomes the depression of the immune system itself. and the t-cells ramp up and go and attack the cancer. >> that's basically the idea. we reprogram your own t-cell with a receptor that's tuned to the particular cancer we're going after. and inside the cell we put a new switch that when it binds to the cancer, it activates that cell and puts it in kill mode. >> i looked at this before you came on. when you use the viral vector sometimes it's temporary. but you can also have it put into the dna of itself with the virus. >> that's right. you can permanently reprogram the cell. >> permanently. so it's not just the current generation of the t-cells that had it on their surface. any subsequent divisions will be the same type of t-cell. >> as long as that cell can

replicate. ultimately these cells are not lasting forever. in fact they're not living that long. >> but these would. >> these would divide and express -- >> and it wouldn't be a -- why can't you find antigens or things on every cancer type that is specific to that cancer type with solid tumors as well and do the same thing? and is it possible that t-cells could cure solid tumors? >> well we're optimistic. but we don't know. the reason we're optimistic is there is another class of drugs called check point inhibitors that basically just allow your t-cells that are already in your body to attack the tumors. they're showing promising results. so if you ask the question can our own t-cells eat a solid tumor? the answer is yes. now, the challenge for us -- you got it right. the challenge for us is we have to find targets that

differentiate the tumor from healthy tumor. >> you know joe, you are very knowledgeable on this subject. and we have openings at juno. we do. and i know hans will give you a business card. >> t-cells congregate in lymph areas where it's not solid tumors typically. they're already there where all the lymphomas are. they circulate. >> well t-cells are surveying our whole body all the time. that's one of our memory responses against diseases we've seen prior. so you can have memory t-cells against a virus that you've seen that are surveying your body. when they see that virus or bad cell again, then they start growing again. >> at this point and we'll talk about the finances and billions of dollars from celgene, but at this point is there more promise in t-cell mediated cancer cures?

or it's both? >> it's early to make antibodies have revolutionized medicine. >> we know that because every drug is called m.a.b. at the end. >> i think if you ask about the potential for these t-cell therapies, some of which are antibodies, i think they would say what we're learning about the immune system now is extraordinary and promises great things. >> is that the side effects though? just the idea that you have to find the target? there have been some severe side effects. >> there have been severe side effects. i think associated with the speed at which the cells grow and that we think is related to the fact we're treating people with specifics. >> we're going to talk real science off camera. there's inside the cell -- intracellular you've got to ramp

it up or ramp down. >> or actually even get rid of them. we call it suicide gene. if we want to get rid of the cells, we believe we can activate a different switch which will program these cells to kill themselves. >> so why did -- >> after they do their job. >> the billion dollars, you could have done it on your own, couldn't you? how did this -- >> that's a great point. this deal is not primarily about money. because you're right. we could have raised money in many different ways. there's a couple of things i think are important. firstly, there are outstanding partner for us in the rest of the world. if you look at the history of biotech, there aren't too many examples of companies that have navigated and had a self-replenishing pipeline as commercializing the rest of the world. that's two big things at the same time. so this deal allows us from a strategic point of view to focus

on the science and building the pipeline. >> hans also talk a bit about how you've done a number of partnerships. celgene a one. but you have a number of partners. because in this world it is about those partnerships are going to help make juno successful. >> yeah. i think, you know as extraordinary as the early clinical results are, this science is very new. and so our strategy is to access the best capabilities in science wherever it may be. that's why we've done so many deals. >> and you've also started building a manufacturing facility. >> we have. >> that's very different than other biotech companies. talk a little bit about why you're doing that. >> we're going to do that next time. we got to run in the meantime. great to have you here though. when we come back the sweet sound of success. pandora, that stock and more movers just ahead. out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift?

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welcome back to "squawk box," everyone. here's what's making headlines this morning. this week concludes with one economic report with june new home sales figures out at 10:00 eastern time. earlier this week we got existing home sales. they rose to an eight and a half year high with average prices setting a record.

the fcc will announce the deal of at&t to purchase directv. they decided they would let the deal proceed. and check out one of this morning's big winners. pandora. the company reportedly had quarterly earnings of 5 cents a share. that's 3 cents better than expected. revenue also beating forecasts. and pandora raising its outlook based on strong growth. you can see that stock is up almost 10%. investigators are calling on the justice department to launch a criminal probe into hillary clinton's use of private e-mail while she was secretary of state. this comes after an internal government review found that hundreds of the messages contained potentially classified information. we're going to talk to maggie but andrew you know you're close to what goes on in maybe more closer than i am to this. where does the obama

administration with how they feel about hillary clinton? for awhile they said they might prefer someone to the left of her to make sure that e -- the president's policies are extended. >> i'm not going to claim to be an expert on any side of these things. >> you work down the street. you know they know what's going on down there. >> because they're a good news organization, they know what's going on. >> they know what to print and what's not to print. or tint as the case may be. >> print. >> but in this case are they on board with hillary? would they -- because if it was -- someone who's close, they would leave this alone. they'd say we're not going near this. >> i can't speak for -- >> or if they don't like her, they might -- >> i can speak for journalists. >> will you ask around to see whether they will take this up?

>> i think maybe arianna might know. want to call ms. huffington? >> that's the same question. does she like hillary or has hillary not left enough? >> actually i don't think her personal politics match the politics of that website. >> maybe not considering she's worth about $300 million. or maybe not anymore. not as much? >> if you make money doesn't mean that you have a particular political division. >> usually you're in the tax frees, raise everybody else's taxes like the millionaires. is that what they call them? >> we're going to move on at this point. we had the ceo of caterpillar on -- >> you can chime in maggie. >> i want you to listen to what doug had to say about caterpillar and economic growth yesterday. >> the fact of the matter is it's a 2% growth economy. and 2% doesn't allow companies like us, industrial companies and a lot of others to invest and grow employment.

>> maggie wilderotter is our guest host. do you agree with doug? >> i do. you know, i think that we're kind of limping along at 2%. i think chaens are investing but they're cautious. and will they get returns on those investments? and there's a big overhang for a number of companies that are global because of the tax code today. and also there's a lot of uncertainty about regulation. so i think some of those drivers that we're living under today in business are causing conservatives -- people to be conservative. >> one of the things jim cramer mentioned yesterday and we mentioned. we talked to doug a little bit about. trends towards buybacks. you're on the boards of so many companies. everybody wants to pursue a buyback, buyback, buyback. he pursued them at $105 a share. wrong price. >> yep. >> how do you think about buybacks? >> i'll tell you, at frontier

we've never done a stock buyback. >> never? >> never. and i think part of it is we deliver a huge yield on our dividend. right? so we give the cash back to our shareholders. that's been our philosophy as a company. because sometimes when you do buybacks, it does pump up earnings per share. >> that's usually the point. >> you know, it -- i think it falsifies that earnings per share because it's not about investing for the future to create value. >> you're assuming that the ceos know whether their stock is a buy or not. a lot of times they don't have any better idea than anyone else. but what kind of ceo doesn't think that what he's doing eventually -- >> or she. >> excuse me. doesn't think that what she's doing is going to eventually make the stock up. that's why they're in the job in the first place. you don't know at $105 whether that's expensive or cheap. in hindsight, it was horrible. but how about ibm? you know why they're doing it

right now. they can't get any revenue growth and have to try to get the earnings per share up. >> hold it. why would you say ibm is doing it for that reason when two seconds ago you said that the ceo of -- >> i don't think anybody -- i don't know whether the ceo really believes that ibm shares are -- >> i'm going to come at it differently. i think there are two types of ceos. some go on the buyback strategies and do it blindly. just say buyback, we have a schedule, doing the schedule. then there are some ceos who are opportunistic about it and say there's an ebola scare or whatever and grab them. right? >> that's what jim said. but it does includesrease earnings per share. >> and i do think that shareholders like buybacks. >> some would rather have dividends. >> i know. >> although what i would say is in the case of caterpillar,

looking at it it's not great. but he thinks -- he knows it's a cyclical business. you're not necessarily going to buy at the bottom. if you're in a downturn for five years -- >> if you didn't know oil was going to go from $100 to $40. >> you don't know. you try toic ma the best decisions possible. >> is that why you have never really gone down that road? >> we decided as a company that we think the shareholders want cash that they get a better tax rate on. >> or sometimes we have no other ideas to buy anything or expand anything. all we can think of is buying back our stock. it doesn't sound creative. >> if you can't get a better return for the shareholders, when you take stock off the table it appreciates the value. >> have you ever had a ceo not say my stock is at these levels? have you ever heard that? >> elon musk has talked about when he thought the stock was overpriced.

>> he's shipping all those on your airplane. >> i'm not mad at him at all. >> i know our stock is still underpriced at frontier. >> see. >> there you have it. thank you. when we return palo alto networks is having a blowout. stock up 57% since january. and sitting at a 52-week high the company's ceo will join us next. equals great rates. it's a fact. kind of like shopping hungry equals overshopping.

at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. welcome back everybody.

with more than 80 of the fortune 100 as clients, 24,000 customers in over 140 countries and a stock up more than 140% in the last year palo alto networks has its thumb on the world of cyber security. joining us is mark mclaughlin who is the ceo. he's also a guest of our -- a friend of our guest host this morning maggie wilderotter. thank you for being here this morning. we appreciate it. >> thanks for having me. >> this is a huge time for cyber security. we've already heard this morning that cyber security is one of the top issues that u.s. ceos are concerned about. i know it's been a huge boom in business for you. but how bad are things? that's what most of us are wondering all the time. what's really happening? >> well i think what's really happening and people are starting to recognize is that we're living in a truly digital age. and the digital age is built on trust. you trust the plains are going to fly in the right direction.

and there's a lot of infrastructure there. when you hear about all these breaches and things not working, it starts to erode that trust. there's a fine line between trusting things are going to work and chaos. and i think there's an assumption that we're on that line right now and we have to fix it. >> ceos are worried. they are concerned about this. how are their actions kind of following through? are they doing the right things to make sure we're protected? >> there's certainly a lot more attention being placed on this by ceos. i think boards are realizing this has to be a competency for every company. >> maggie, you met because you were on a committee. you must be talking about these all the time. >> we were. i was the chair of that committee. mark has taken my place to

advise the president and also to bring together a group of ceos to protect infrastructure in the united states. mark, you might want to talk a little bit about this subject. many think it's war. so what are your thoughts on that? >> yeah. it's good to see you, maggie. the government and the industry really have to work together. there's a lot of talk constantly about public/private partnership and underlying all that is the realization that from an infrastructure perspective of what it takes, what asset it takes to do cyber security and protection and prevention, that the vast majority of that is actually in the private sector hands. not the government hands. however, government's got to take a lead from a policy perspective around that. and then there's the issue about sharing of threat intelligence for information. the more of that shared in a highly automated way, the best we can protect against cyber attacks. >> we've had guests who come in

and said they don't think it's a question of if but when we'll face some sort of massive infrastructure or financial attack. what do you think about that? >> you know i think it's certainly possible. and the probability goes up a lot. i think you have to look at who are the attackers that generally fall into four categories. and what's their motives and then capability set. all of them have different motives and capability sets. i think the one that's most concerning probably is terrorist in the sense that if they had the capabilities, the motives are certainly there to do massive damage to lots of infrastructure. >> so mark what do we do about detection? you know, there's been a lot of talk about protection. but how do companies get into detecting something is really happening? >> there are very related concepts. we talk about the preventive mind-set. the reality of an attack is that an attack had to do a number of things correct in order for it

to succeed. not just one thing. it has to move through a network, find data get the data out. and any point of that where you could detect the fact that somebody may be in the network but hasn't completely executed has a prechbs to do that there. so they're related concepts. >> in terms of the cyber terrorism and the terrorists being the party you're most worried about, what about nation states? we know the russians the chinese have intentionally gone out and tried to hack into certain areas. but you're not worried about the huge cyber attack coming from one of them? >> well i think it's more likely that cyber espionage being conducted by nation states would continue and there would be serious downstream consequences from that. if you look at the breach being rumored of the nation state attack. if that's the case, they gar gathered a lot of intelligence they can use. from a nation state perspective, the attack that we're measuring here that takes down critical

infrastructure in a big way probably would be concerned tanamount to an act of war. >> many quietly whisper about whether corporations should actually start pursuing more aggressive measures. meaning not just defending themselves, if you will but launching to some extent their own attacks. how do you feel about that? >> that's probably a mistake in my opinion. and reason is capability set to do that is widely varied. the second thing is it's not hard to imagine getting it wrong. meaning you know an attacker launches an attack. somebody wants to play offense on that and then goes and attacks the entity of the wrong person. and then just all sorts of liability issues you can see downstream from that for a corporation. i'm not sure they want to take that on. >> want to thank you for your time this morning. >> thanks for having me. >> great job with the company too.

>> thank you very much. >> on a tear. remarkable situation. >> it is. it's terrific. when we come back the wrapup this week of -- on wall street with our good friend mr. cramer. his take on earnings so far and what's still to come. got to get his view on amazon as well. as we head to a break, take a look at this morning's futures. the dow jones looks to open up about 17 points higher. we're back in a moment. seriously? you're not at all concerned? about what now? oh, i don't know. the apocalypse? we're fine. i bundled renter's with my car insurance through progressive for just six bucks more a month.

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get down to the new york stock exchange. jim cramer joins us. and triple digit now for amazon. up over 100 from close at 482 indicated around 583, 584. 29 million 92 million. that's not how to look at it. i said it's a $92 million profit. your can't look at it that way. >> they could have reported any number they wanted. the company turns out to be usually profitable. everybody has been saying ever since they broke out the amazon web services, you realize there's a business here that is no longer just smoke and mirrors. you finished reading that conference call and you realize, look, all they're trying to do is figure out where they can dominate. maybe they should go dominate

india. acceleration across the board everywhere. amazon prime turned out to be bigger than black friday for them. it exceeded all expectations. this was a remarkable quarter, and the shorts who have been betting against this company for years is going to be bidding it up 50. this is a juggernaut. i knew they could be profitable but not this profitable. >> i guess when the shorts are gone, that will be the end. again and again and again, in barrons in what section was it? i forget what he wrote. >> you're so right. other retailers will always tell you, i don't know why they got a pass it's ridiculous. now what they have to do is figure out how much money they want to put in to taking more business. do it on amazon daily. it worked and they are -- all these comparisons are fatuousfatuous.

it should be because they're having a better year. this was a remarkable quarter. >> what they do can't be done. it's like federal express. the post office is already there. you can't do it and there's no way amazon can do it. and i still don't believe that it works and it does. the warehouses the inventory -- >> it works everywhere. it works everywhere. in the end, this is amazon versus netflix and facebook and google and apple. and they are in the end, those are the companies that are dominant companies. they're american companies. for those thinking china is going to dominate good luck to you. >> when they say one-hour delivery with drones should we

say that can't be done? >> no. we say buy am brael la. >> what do you think about the idea of amazon spinning off the cloud? >> i don't think they're a financial engineer. if you're going to dominate the world, you don't want to do financial engineering. you don't have to. they're not about wall street. they were nice on the call. they weren't snapping at home. amazon she's tough. the amazon guys, it was like capitalism with a human face. >> all right, jim. see you in a couple minutes. >> when we come back, we'll wrap things up with our guest host. en power outages in the us are caused by weather. but utilities can now predict where the power will go out, within a few city blocks. working with ibm they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur.

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ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business. let's get our final thoughts from our guest host maggie wilderotter. if you had a case of wine with you, i guess we would have seen it. >> we've been drinking it through the whole show. >> is it in wine country? >> it is actually in the amador county of california. and it's wilderotter winvineyards.

my husband is the wine maker and grape growers and he has been for 20 years. >> did he attach himself? >> he did. he learned through the process of working with a bunch of other wine makers in our area. i'll also say we're going to build a little bed in breakfast called the grand reserve in and open that up in wine country as well. >> is there an invitation? >> absolutely. we'll host a "squawk box" show at the winery. >> what's the whole product line there? >> so, we make about 20 different varieties. whites and reds so on the whites we do a couple french. and then on the reds we do some of the traditional for that area. the area is beautiful. rolling hills. we also do a spanish grape. we do a number of roans.

no pinot. not a good climate for that. >> can you do a 20/20 or thunder bird for me? >> anything for you. >> it's got to age for quite a while. >> you think of people with wineries parsons, he made his forture and then decided to go into wine. this was something your husband was already doing? >> yes. and it's profitable. i'm the banker. >> it must be gratifying. >> it is, and we have two boys who come out for harvest and help them. >> did you ever squeeze grapes between your toes? >> no. >> do people do that out there? >> no. we try not to. >> that's where the flavor comes in. >> i have done some activities with people and did picking

grapes. >> is it automated? >> we do it all by hand for premium wines. >> has it ever been the go-to priet chardonnay in any season. >> there are great years. i will say '12, '13, and even '11 from california. how much would a chardonnay and first, tell me what the price is and then tell me what my price would be. >> we are very reasonable. our prices are between 19 and $45. >> for a bottle? >> for a bottle. we have a great wine club and for you, absolutely. you're friends and family. it's okay. >> you'll come back. it's great -- >> thank you for having me. >> it's ban loteen a lot of fun today.

>> even though your sisters were the ones in cincinnati i think it's rubbed off and you turned out very well. >> thank you. >> is that you? >> yeah but you tell everybody. >> be sure to join us on monday. "squawk on the street" starts right now. >> good friday morning and welcome to "squawk on the street." i'm david faber along with jim cramer. carl quintanilla has the day off. let's give you a look at futures as we begin this last trading day of the week. you can see a mixed bag there after a not particularly good day if you're on the market yesterday and more painful than many thought from the numbers themselves. how's the ten-year note yield? we'll show you. there it is.